Working Paper: NBER ID: w14120
Authors: Gary Richardson; Patrick Van Horn
Abstract: New data reveals that bank distress peaked in New York City, at the center of the United States money market, in July and August 1931, when the banking crisis peaked in Germany and before Britain abandoned the gold standard. This paper tests competing theories about the causes of New York's banking crisis. The cause appears to have been intensified regulatory scrutiny, which was a delayed reaction to the failure of the Bank of United States, rather than the exposure of money-center banks to events overseas.
Keywords: Banking Crisis; Regulatory Scrutiny; Great Depression
JEL Codes: E42; G21; N1; N12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| intensified regulatory scrutiny (G18) | surge in bank failures (F65) |
| failure of the Bank of the United States (N11) | intensified regulatory scrutiny (G18) |
| intensified regulatory scrutiny (G18) | heightened bank examinations (G28) |
| heightened bank examinations (G28) | surge in bank failures (F65) |
| greater foreign exposure (F69) | less bank distress (G21) |